• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exam Results

Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

contingent liability

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › contingent liability

  • This topic has 5 replies, 3 voices, and was last updated 8 years ago by P2-D2.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • February 19, 2017 at 4:48 pm #373178
    asad khan
    Member
    • Topics: 1
    • Replies: 11
    • ☆

    Q from Dec 2014: At the time of business combination 1 Dec 2013 with subsidiary, Parent has included in the FV of sub’s identifiable net assets, an unrecognised contingent liability of $6m in respect of a warranty claim in progress against subsidiary. In March 2014, there was a revision of the estimate of the liability to $5m. The amount has met the criteria to be recognised as a provision in current liabilities in the financial statements of subsidiary and the revision of the estimate is deemed to be a measurement period adjustment.

    In the kit answer the reduction of $1m is not reflected in the liabilities in SOFP. Please explain?

    February 19, 2017 at 9:35 pm #373209
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    Hi,

    I think it is because the contingent liability is no longer contingent and has been recognised as a liability in the subsidiary’s books. It is therefore already included in the net assets at the reporting date and so no adjustment is necessary at the reporting date.

    Thanks

    February 20, 2017 at 10:18 am #373305
    asad khan
    Member
    • Topics: 1
    • Replies: 11
    • ☆

    Thanks a lot for explaining.

    By the way what P2-D2 mean? 🙂

    February 22, 2017 at 12:56 pm #373659
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    It’s Open Tuition’s equivalent of R2-D2 from Star Wars……….

    April 26, 2017 at 11:54 pm #384072
    hazratusman
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    hi dear sir hope you are fine
    q 1 = At the time of the business combination with Margy, Joey has included in the fair value of Margy’s identifiable net assets, an unrecognised contingent liability of $6 million in respect of a warranty claim in progress against Margy. In March 20X4, there was a revision of the estimate of the liability to $5 million. The amount has met the criteria to be recognised as a provision in current liabilities in the financial statements of Margy and the revision of the estimate is deemed to be a measurement period adjustment.

    q 2- On 31 July 2008, Grange acquired a 100% of the equity interests of Fence for a cash consideration of $214 million. The identifiable net assets of Fence had a provisional fair value of $202 million, including any contingent liabilities. At the time of the business combination, Fence had a contingent liability with a fair value
    of $30 million. At 30 November 2009, the contingent liability met the recognition criteria of IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the revised estimate of this liability was $25 million. The accountant of Fence is yet to account for this revised liability.

    whats the diffrence between these two adjustment thanks in advance

    April 27, 2017 at 8:29 am #384099
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    @hazratusman said:
    hi dear sir hope you are fine
    q 1 = At the time of the business combination with Margy, Joey has included in the fair value of Margy’s identifiable net assets, an unrecognised contingent liability of $6 million in respect of a warranty claim in progress against Margy. In March 20X4, there was a revision of the estimate of the liability to $5 million. The amount has met the criteria to be recognised as a provision in current liabilities in the financial statements of Margy and the revision of the estimate is deemed to be a measurement period adjustment.

    q 2- On 31 July 2008, Grange acquired a 100% of the equity interests of Fence for a cash consideration of $214 million. The identifiable net assets of Fence had a provisional fair value of $202 million, including any contingent liabilities. At the time of the business combination, Fence had a contingent liability with a fair value
    of $30 million. At 30 November 2009, the contingent liability met the recognition criteria of IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the revised estimate of this liability was $25 million. The accountant of Fence is yet to account for this revised liability.

    whats the diffrence between these two adjustment thanks in advance

    Hi,

    Can you not post these questions on a thread that has already been created and start a new thread please. I believe that your first question already been answered and if you create a new thread I’ll answer the second one too.

    Thanks

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • omerbasheer on The Statement of Financial Position and Income Statement (part d)
  • Kim Smith on AA Chapter 9 Questions
  • Walkera on Basic Variance Analysis part 1 – ACCA Performance Management (PM)
  • kartierclass on AA Chapter 9 Questions
  • revathik on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in